Query on tds deducted expenditure

Yes if the amount of interest exceedsRs.5000 during the year then it will be disallowed

In case of failure to deduct tax at source the following provisions of IT act 1961 will get attracted.

-40a(ia)  Dissallowance of specific expenditure (while computing the income of            

            the deductor) if tds is not deducted from the Payment.

in addition to dissallowance the following penality interest provision  will also get attracted.

-201(1)  May demand tax equal to tax amount deductible but not deducted.

-201(1A) Interest   @ 1 % p.m. of tax deductiable.

-271C    penality equal to the amount of tax deductible but not deducted.